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PLSA raises concerns on PPA’s proposed uniform tariff

The Philippine Liner Shipping Association (PLSA) is seeking clarification on uniform tariff rates the Philippine Ports Authority (PPA) wants applied to ports won through through bidding under a new terminal management policy.

In a position paper dated September 9, PLSA said the PPA did not present a formula for rates computation during the August 30 public hearing, making “difficult to determine” the proposal’s “reasonableness”.

During the hearing, PLSA said while there was mention of the proposed cargo-handling rates being the “highest existing” at PPA ports, there was no mention of other parameters considered.

The proposal—based on rates of Cagayan de Oro port, the highest among PPA ports—will be the base tariff to be used by cargo-handling and terminal operators that will win contracts categorized as Tiers 1 to 5 under PPA’s Port Terminal Management Regulatory Framework (PTMRF).

Under PPA Administrative Order (AO) No. 03-2016, PTMRF outlines guidelines for awarding terminal management contracts, and prescribes categorizing investments into six tiers to make it easier to determine the investment arrangements of a port.

Tiers 1 to 5 range from a fully private concession to a pure operations and management contract. Ports under Tier 6 are fully PPA-managed ports.

PLSA said whatever formula is devised should hew to PPA AO 03-2016. The formula should also consider historical data on classification and value of cargoes, historical volume of cargoes, and economic projections of market requirements; and define the scope of each service rendered and peculiarities of ports, among others.

PLSA said that based on such data, similar ports may be clustered, a suitable tier may be determined, and using the return of investment, “a uniform optimal tariff applicable to similar/clustered ports may be computed.”

The group is also seeking clarification on the definition of stevedoring, as PPA said during the hearing that stevedoring will become the only nomenclature to be used for all works performed on board a vessel and at the dock, pursuant to Section IV, item g.g., of PPA AO 03-2016. This means that under the proposed new tariff structure, arrastre will be part of the stevedoring rate.

PLSA pointed out that stevedoring as defined in PPA AO 03-2016 is broad and would “cause confusion between the shipping lines and the cargo owners or consignees on who should pay and for what service(s).”

PLSA noted that arrastre refers to dockside operations, while stevedoring refers to operations on board a vessel, with both terms pertaining to cargo handling. It noted, however, that since time immemorial, arrastre service has been associated with cargo-related charges paid for by shipper/cargo owners while stevedoring has been premised as being factored into sea freight, categorized under vessel-related charges.

PLSA suggests doing away with the distinction, and instead adopting “the PPA definition with regard to the scope and range of services as arrastre and stevedoring, (and) bundl(ing) both together”.

It said PPA needs to come up with “another generic term to incorporate handling of the cargo”, adding a “re-definition of such new ‘term’ for the guidance of cargo owners and all stakeholders” is required.

PLSA said “no definition was sufficiently provided” for pre- and post-handling in the proposed tariff. It was, however, observed during the hearing that such charges will be on a per request basis.

The group is, in addition, seeking clarification on contrasting provisions of AO 03-2016 and its implementing rules, AO 12-2018. Under AO 03-2016, shipping companies may be allowed to bid as a contractor, provided safeguards to promote competition are included in the regulations and the agreement.

But under AO 12-2018, a prospective bidder must not be engaged in any business activity, as this will prevent the bidder from properly discharging its contractual obligations under any port terminal management contract to be awarded. This prohibition covers entities engaged in maritime transportation.

PLSA pointed out that as in any issuance, the IRR is intended to support policy execution, and that AO 12-2018 should be rewritten to correct or amend the flaw/inconsistency with AO 03-2016.

The proposed new tariff structure will reduce to one schedule the existing 121 cargo-handling tariff schedules nationwide, according to Efleda Baje, PPA Port Pricing Division-Commercial Services Department acting division manager, in a presentation during the public hearing.

Baje said that under the current tariff structure, cargo classification varies per port, with non-prime commodities charged higher than prime commodities. She added that the non-uniform unit of charging “often leads [to] confusion in the field,” and that arrastre rates for handling conventional export cargoes in Manila are discounted by 18.30% while conventional export cargoes in Visayas and Mindanao are not.

As proposed, the reclassification of cargoes will be reduced to three from the existing 10, and rates for handling domestic and foreign cargoes will be the same.

The proposed tariff is composed of rates for cargo-handling (breakbulk cargoes, bulk cargoes, containerized cargoes, and charges for value-added services); roll-on/roll-off (RoRo) terminal fee; passenger terminal fee; porterage rates; waste reception fee; and line handling fee.

Ports with existing contracts with PPA, such as those in Manila and Batangas, will not be covered by the proposed tariff rates, as the new rates will only apply to ports to be subjected to bidding under PTMRF. – Roumina Pablo


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